The UAW and Once-Big Three try to exclude Japan from free trade talks

posted at 8:41 am on April 3, 2013 by Karl

Does Asian trade policy hold a larger lesson about the decline of our republic?

A couple of weeks ago, Japanese Prime Minister Shinzo Abe announced that Tokyo would seek to join talks on a U.S.-led Pacific free trade pact called the Trans-Pacific Partnership (TPP). Opening Japan to more competition is a significant (and the most free-market) part of Abe’s plan to revitalize Japan’s economy. The United States and 10 other countries negotiating the TPP could formally decide whether to allow Japan into the talks later this month, during the annual trade ministers meeting of the Asia-Pacific Economic Cooperation forum. Tokyo is seeking bilateral meetings with existing members to gain entry.

The reaction from the Obama administration ran true to form. U.S. Trade Representative Ron Kirk put out a statement looking forward to engaging with Japan “[i]n close consultation with Congress and our domestic stakeholders.” Congress wasted no time in “consulting.” Dozens of protectionist Democrats, led by Rep. John Conyers (coincidentally of Michigan) expressed their alarm, almost entirely about the Japanese auto market.. But it’s not just Democrats. Some Republicans, like House Ways and Means Chairman Dave Camp (also coincidentally of Michigan) are also, er, “concerned” about the Japanese menace.

A skeptic might wonder whether these pols are merely parroting the concerns of those aforementioned “stakeholders.” The UAW — also a stakeholder in the Democratic Party — is apoplectic over the idea that Japan might join the TPP talks. Conversely, the Once-Big Three’s opposition is expressed by the American Automotive Policy Council, in the form of GOP Gov.-turned-lobbyist Matt Blunt.

Outside the AAPC, Ford has taken the lead in opposing Japanese participation in the free trade talks. As Japan has a zero tariff on automobiles (and the U.S. still maintains a 2.5% tariff), Ford focuses on non-tariff barriers, particularly charges that Japan manipulates its currency by devaluing the yen. General Motors stays quiet on that subject, perhaps because GM Korea CEO Sergio Rocha recently urged South Korea to engage in similar tactics. Chrysler is also pretty quiet, perhaps hoping everyone will for get they’re now owned by Fiat.

Complaints about currency devaluation are vaguely amusing, given our own government’s stretch of quantitative easing — which may be one reason the Obama administration maintains Japan is not manipulating the yen. But on a more serious note, one might ask whether the issue — and other non-tariff barriers — might come up in the TPP talks if Japan is allowed to join them. If we want more access to Japanese markets and a smaller trade deficit, maybe we should try negotiating with Japan.

Ray Mungenast, chairman of the American International Automobile Dealers, makes short work of the stakeholders’ remaining talking points against Japan joining the TPP talks. The Once-Big Three have closed most of their Japanese dealerships since 1996, and don’t really sell the small-engine cars that make up the vast majority of sales in Japan. It’s almost like they’re trying to be uncompetitive.

I could close with the standard reminder that US consumers literally pay the price of the protectionism sought by the UAW, the Once-Big Three, and their water-carriers in the Beltway. It’s as true now as always. It also hurts American business that actually want to export and compete in Japan.

But it’s also worth pointing out how symptomatic this issue is of the way the Obama administration — and increasingly, Beltway GOPers — routinely operate. After all, how different is this from the Obama administration’s bailout of the auto industry in favor of the UAW? It reflects a philosophy in which auto companies exist to support union workers and their fat pensions, and taxpayers exist to support the auto companies’ surrender to that philosophy. The same underlying philosophy gave birth to Obamacare by making health insurers, pharmacos and unions effective architects of the legislation. Similarly, the cap-and-trade legislation that passed the House was mostly a product of favored energy companies. And today, immigration legislation is mostly negotiated by the Chamber of Commerce and the AFL-CIO, safely out of public view. Call it government of the stakeholders for the stakeholders.

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An investigation into quid pro quo relationship between UAW and Obama administration would be nice in 2017. Governmental officials will likely be immune to it, but UAW honchos won’t. Orange will look good on them.

“Although the tariff act was passed after the stock-market crash of 1929, some economic historians consider the political discussion leading up to the passing of the act a factor in causing the crash, the recession that began in late 1929, or both, and its eventual passage a factor in deepening the Great Depression.[16] Unemployment was at 7.8% in 1930 when the Smoot–Hawley tariff was passed, but it jumped to 16.3% in 1931, 24.9% in 1932, and 25.1% in 1933.[17]”

The other day I read that the unions and the Chamber of Commerce had agreed to new policy directions for amnesty for illegals (I don’t work for the AP). Now we see that the unions are setting policy for trade agreements. When did our government turn over governing to the unions and their bosses?

Btw – I’ve owned 3 Camaros (86, 97 and an 02). I was planning on buying a 4th but not so long as GM is an arm of the US Government. Most likely I’m becoming a mustang guy…

Skywise on April 3, 2013 at 9:34 AM

I had an ’84 Camaro, 96 horses of roaring power, and an ’89 Mustang GT with a whole 230 horse. Now it’s all Stang for me.

And I remember the Berlinetta; pinstripes, T-tops, and some badging. Other than that no better than my stripped base model Camaro, though the weird, baseball sized stick shift knob was covered in faux leather (WOW said the girls).

Record number of Americans in poverty.
Record number of Americans on food stamps.
Record number of American wealth lost.
Record drop in American wages.
Record increase in food, gasoline, and energy prices.

I’d hate to see how badly things would be for Americans if 0bama and the democrat party members in good standing were not all about helping the little guy.

Complaints about currency devaluation are vaguely amusing, given our own government’s stretch of quantitative easing — which may be one reason the Obama administration maintains Japan is not manipulating the yen.

Currency manipulation (devaluation) as you call it is a real problem. I am not as versed with Japanese currency manipulation, but the Chinese currency manipulation problem results in as much as a 40% trade advantage to exporters from China and a 40% penalty for those attempting to export to China.

I suggest following Peter Morici, an economist at the University of Maryland. He does a fantastic job of laying out the issues with currency manipulation and the impact to jobs in the United States.

The second part of your statement is vaguely amusing. Conservatives have been consistently opposed to QE. We should be opposed to currency manipulation of foreign governments as well.

You presented no evidence for your statements on currency manipulation, except a veiled attack against a policy that conservatives oppose to begin with.

To try to laugh off the very real problem with currency manipulation is to cede even more ground to foreign governments and the ever-increasing trade deficit.

1/4 of our annual trade deficit can be attributed to currency manipulation. Putting your head in the sand and saying it doesn’t exist will not change that.

I’m serious. They do not represent us, and they grow less representative every year. Is it necessary to leave their party, start our own and not let them in? It seems so childish. But they have an inordinate amount of power for forming such a tiny part of the party by numbers, and they routinely lose elections. How do we fight them?

I don’t understand why certain individuals (Sean Hannity) keep telling us to “buy American.” I’ll buy an car from a non-UAW manufacturer, which means Japanese cars become a much more attractive option. And considering how attractive an option they already are versus American cars that feature fewer innovations, It’s almost guaranteed I’m going to buy a Nissan or Subaru.

The last time I bought a UAW-made car, it self-destructed within a year — spending 90 days of that first year in the shop. Factory order Ford Taurus MT5 station wagon, stick on the assembly line for over a month during a UAW strike.

I don’t know why you think I’m laughing off the currency manipulation issue. I’m laughing at the hypocrisy of or government on the issue. I immediately add that if you want to deal with it, not dealing with Japan probably is not a good approach.

Also, although you’re concerned about Chinese currency manipulation, I can guarantee you at least one of the companies involved here benefits from it. Doesn’t make it right of course, but it is a measure of the moral authority of those objecting to talking to Japan.